Medtronic plans to cut 2,000 jobs

May 21, 2013, 4:45PM

05/21/2013

SANTA ROSA -- Medtronic, Inc. (NYSE: MDT) today said it would cut 2,000 jobs across the company as a result of "manufacturing consolidation efforts," while reporting that its Cardiac and Vascular Group, which includes operations in Santa Rosa, had worldwide sales of more than $2.3 billion for an increase of 5 percent over the year.

Medtronic spokeswoman Cindy Resman told the Business Journal that approximately half the job cuts will take place overseas and 70 jobs would be affected across California, including Santa Rosa. Most affected employees have already been notified, she said.

"The company’s current worldwide employee populations is approximately 45,000 -- this is relatively flat from the start of our (fiscal year 2013)," Ms. Resman said in an email, also pointing out that Medtronic currently has 555 positions posted on its website, including 105 in California.

About 65 percent of all cuts have already taken place. The remainder will take place before the end of the company's 2014 fiscal year, Ms. Resman said, adding that while job cuts have occurred in some areas, growth has occurred in others.

The announcement of companywide jobs cuts came during a conference call with investors and reporters announcing Medtronic's fourth-quarter earnings.

Minneapolis-based Medtronic anticipates it will save between $200 million and $225 million annually as a result of the job restructure. Cuts will take place primarily in medical device maker's Cardiac and Vascular Group and spine segment.

The Cardiac and Vascular group, which includes the cardiac rhythm disease management, coronary, structural heart and endovascular businesses, reported international sales of $1.34 billion in its fourth quarter and fiscal 2013, ended April 26. That's a 7 percent increase over the year after adjusting for currency changes, or 4 percent as reported, according to Medtronic.

Companywide, Medtronic reported international fourth-quarter revenues of nearly $4.5 billion, up 5 percent for the year when adjusted for currency, which included a $48 million hit from currency fluctuations.

Fourth-quarter earnings on that revenue were $969 million, or 95 cents per diluted share, for a decrease of 2 percent on revenue and 1 percent on share value over the year.

For the Cardiac and Vascular Group, fourth-quarter revenues were $1.33 billion, a 4 percent increase over the same period last year.

Coronary revenue of $465 million grew 5 percent, with sales of drug-eluting stents increasing by 22 percent when adjusted for currency variations, driven gains of the Resolute Integrity drug-eluting stent.

Structural Heart revenue of $310 million grew 8 percent on a constant currency basis or 7 percent as reported. Growth was driven by the strength of transcatheter aortic heart valves.

Endovascular revenues of $235 million grew 7 percent over the year, driven by "significant growth" with Medtronic's Endurant aortic stent graft in Japan, while strong growth from thoracic portfolio was driven by Valiant Captivia in the U.S., Japan and China.

Medtronic said fourth-quarter revenue from implantable cardioverter defibrillators possibly outperformed the rest of the market, growing 2 percent over the year to $755 million after adjusting for currency differences.

"These fourth-quarter results were a strong finish to a solid fiscal year and, more importantly," represented "another step toward our goal of delivering consistent and dependable growth," Omar Ishrak, Medtronic chairman and chief executive officer, said in a statement.

The Restorative Therapies Group, which includes the spine, neuromodulation, diabetes and surgical technologies businesses, had worldwide sales in the quarter of $2.117 billion, an annual increase of 4 percent when adjusted for currency. Spine product revenues on those sales were $811 million, which was flat over the year after adjusting for currency changes.

Medtronic also projected its fiscal 2014 full-year revenues to grow by 3 percent to 4 percent, while diluted earnings per share could grow in the range of $3.80 or $3.85 per share, or about 6 percent to 8 percent. Both projections are currency-adjusted.

Shares of Medtronic were $52.35 at the close of Tuesday trading, up nearly 5 percent. In after-hours trading, the price crept back down to $53.17, for an overall increase of 1.57 percent.

SANTA ROSA -- Medtronic, Inc. (NYSE: MDT) today said it would cut 2,000 jobs across the company as a result of "manufacturing consolidation efforts," while reporting that its Cardiac and Vascular Group, which includes operations in Santa Rosa, had worldwide sales of more than $2.3 billion for an increase of 5 percent over the year.

Medtronic spokeswoman Cindy Resman told the Business Journal that approximately half the job cuts will take place overseas and 70 jobs would be affected across California, including Santa Rosa. Most affected employees have already been notified, she said.

"The company’s current worldwide employee populations is approximately 45,000 -- this is relatively flat from the start of our (fiscal year 2013)," Ms. Resman said in an email, also pointing out that Medtronic currently has 555 positions posted on its website, including 105 in California.

About 65 percent of all cuts have already taken place. The remainder will take place before the end of the company's 2014 fiscal year, Ms. Resman said, adding that while job cuts have occurred in some areas, growth has occurred in others.

The announcement of companywide jobs cuts came during a conference call with investors and reporters announcing Medtronic's fourth-quarter earnings.

Minneapolis-based Medtronic anticipates it will save between $200 million and $225 million annually as a result of the job restructure. Cuts will take place primarily in medical device maker's Cardiac and Vascular Group and spine segment.

The Cardiac and Vascular group, which includes the cardiac rhythm disease management, coronary, structural heart and endovascular businesses, reported international sales of $1.34 billion in its fourth quarter and fiscal 2013, ended April 26. That's a 7 percent increase over the year after adjusting for currency changes, or 4 percent as reported, according to Medtronic.

Companywide, Medtronic reported international fourth-quarter revenues of nearly $4.5 billion, up 5 percent for the year when adjusted for currency, which included a $48 million hit from currency fluctuations.

Fourth-quarter earnings on that revenue were $969 million, or 95 cents per diluted share, for a decrease of 2 percent on revenue and 1 percent on share value over the year.

For the Cardiac and Vascular Group, fourth-quarter revenues were $1.33 billion, a 4 percent increase over the same period last year.

Coronary revenue of $465 million grew 5 percent, with sales of drug-eluting stents increasing by 22 percent when adjusted for currency variations, driven gains of the Resolute Integrity drug-eluting stent.

Structural Heart revenue of $310 million grew 8 percent on a constant currency basis or 7 percent as reported. Growth was driven by the strength of transcatheter aortic heart valves.

Endovascular revenues of $235 million grew 7 percent over the year, driven by "significant growth" with Medtronic's Endurant aortic stent graft in Japan, while strong growth from thoracic portfolio was driven by Valiant Captivia in the U.S., Japan and China.

Medtronic said fourth-quarter revenue from implantable cardioverter defibrillators possibly outperformed the rest of the market, growing 2 percent over the year to $755 million after adjusting for currency differences.

"These fourth-quarter results were a strong finish to a solid fiscal year and, more importantly," represented "another step toward our goal of delivering consistent and dependable growth," Omar Ishrak, Medtronic chairman and chief executive officer, said in a statement.

The Restorative Therapies Group, which includes the spine, neuromodulation, diabetes and surgical technologies businesses, had worldwide sales in the quarter of $2.117 billion, an annual increase of 4 percent when adjusted for currency. Spine product revenues on those sales were $811 million, which was flat over the year after adjusting for currency changes.

Medtronic also projected its fiscal 2014 full-year revenues to grow by 3 percent to 4 percent, while diluted earnings per share could grow in the range of $3.80 or $3.85 per share, or about 6 percent to 8 percent. Both projections are currency-adjusted.

Shares of Medtronic were $52.35 at the close of Tuesday trading, up nearly 5 percent. In after-hours trading, the price crept back down to $53.17, for an overall increase of 1.57 percent.